The market for initial public offerings (IPOs) continues to expand, with utility firm Centuri (NYSE:CTRI) making its debut today. A subsidiary of Southwest Gas (NYSE:SWX), Centuri provides various solutions to natural gas distribution and electric utilities. CTRI stock has been well-received on launch day, moving up almost 10% in the late afternoon hours.
Fundamentally, Centuri will test the appetite for IPOs that extend beyond the broader technology ecosystem. In 2021, the market for new listings enjoyed a record year. However, the following year saw significant erosion as inflation and high borrowing costs curbed investor sentiment. Since last year, IPOs have sprouted more earnestly, though the focus has been on innovation-oriented enterprises.
Here are seven more things to know about CTRI stock and its IPO:
1. The Terms of the Deal
On April 17, Southwest and Centuri announced the pricing of the latter entity’s IPO. The terms involved the offering of 12.4 million shares at an IPO price of $21 per share. Further, Centuri granted underwriters a 30-day option to purchase up to an additional 1.86 million shares to cover over-allotments, if any.
2. Centuri Has a Long History
While CTRI stock may have just made its public market debut earlier today, the underlying enterprise has a long history. According to Bloomberg, Centuri “traces its roots to 1909.” Moreover, the company has roughly 12,500 employees serving 43 states as well as two provinces in Canada.
3. Carl Icahn Is a Supporter
According to Southwest and Centuri’s IPO press release, billionaire activist investor Carl Icahn — via Icahn Partners and Icahn Partners Master Fund — will purchase 2.59 million shares of CTRI stock. The deal is aligned with a concurrent private placement “at a price per share equal to the IPO price.”
4. CTRI Was a Previously Signaled Move
Southwest Gas stated in 2022 that it would spin off its infrastructure services business to better focus on its regulated natural gas business. Notably, this move came about after reaching a settlement with Icahn “who had objected to an acquisition it had made.” According to Bloomberg, Icahn Enterprises (NASDAQ:IEP) owns about 15% of SWX stock.
5. Financials Could Use Some Work
Per Centuri’s filings, the company lost $186 million on sales of $2.9 billion for the year ending Dec. 31, 2023. That contrasts with a net loss of $168 million on sales of $2.8 billion in the prior fiscal year. With the market pivoting away from certain risk-on names, the expanded red ink could cloud CTRI stock for the longer term.
6. It’s a Complex Narrative
According to a Deloitte study, the power and utilities outlook for the current year faces an evolving landscape. While there could be opportunities for certain players, the underlying sector faces myriad complexities and challenges. Still, a main takeaway is that electricity prices should remain steady and sales may rise about 2%.
7. Sustainability Is Key
While CTRI stock enjoyed a strong debut, maintaining momentum will be key. Although in an unrelated space, social network Reddit (NYSE:RDDT) also printed a strong performance during its recent public debut. In later sessions, though, RDDT stock has noticeably faded away.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
